Malta and Monaco signed a treaty in 2019, still in force today, to avoid double taxation on those with interests in both countries. The agreement establishes first and foremost that dividends paid by a company based in the small Monegasque state to a Maltese resident who turns out to be the beneficial owner, are taxable only in Malta, and therefore without withholding tax. No withholding tax is levied also in the opposite direction, i.e. for dividends paid by a Maltese company to a shareholder resident in Monaco.
The same applies to income deriving from interest: the double taxation treaty establishes in fact that interest deriving from Monaco and paid to a resident of Malta is taxable only in Malta, as well as that paid by a person residing in Malta to a resident of Monaco.
No withholding tax is also levied on income derived from royalties, which include the license granted to third parties of intangible property such as patents, knowhow and other intellectual property usage rights: if a resident of Malta generates this kind of income from Monaco it will only be taxed in Malta, and the same applies the other way around.
These are other points mentioned in the understanding:
- Artists and sportspeople: income produced by a person working in entertainment or sports can only be taxed in the state where the activities are exercised
- Pensions: pensions and similar remuneration derived from past employment, as well as any annuity, are taxed only in the country of residence
- Other income: Income not specifically dealt with in the Malta-Monaco bilateral double taxation agreement is taxable only in the country of residence.